A Czech Billionaire Takes PM Role, Vowing to Cut Commercial Interests

Entrepreneur Andrej Babis has been sworn in as the Czech Republic's new premier, with his complete ministerial team anticipated to be appointed in the coming days.

His confirmation came after a fundamental stipulation from President Petr Pavel – a formal commitment by Babis to cede control over his sprawling agribusiness and chemical holding company, Agrofert.

"I promise to be a prime minister who upholds the interests of the entire populace, domestically and internationally," stated Babis after the event at Prague Castle.

"A prime minister who will work to transform the Czech Republic the best place to live on the face of the Earth."

Grand Visions and a Pervasive Corporate Footprint

These are high-reaching aspirations, but Babis, 71, is familiar with thinking big.

Agrofert is so deeply embedded in the Czech business landscape that there is even a dedicated app to help shoppers avoid purchasing products made by the group's more than 200 subsidiaries.

If a product – for example, Viennese-style sausages from Kostelecké uzeniny or sliced bread from Penam – belongs to an Agrofert company, a thumbs-down symbol appears.

Babis, who was formerly prime minister for four years until 2021, has shifted to the right in recent years and his cabinet will incorporate members of the far-right SPD and the Eurosceptic "Motorists for Themselves" party.

The Promise of Separation

If he honors his vow to divest from the company he built from scratch, he will cease to profit from the sale of a single Agrofert product – ranging from processed meats to agricultural chemicals.

As prime minister, he asserts he will have no insight of the conglomerate's financial health, nor any power to sway its prospects.

Governmental decisions on government procurement or subsidies – whether national or EU-funded – will be made without regard to a company he will no longer own or profit from, he adds.

Instead, he says that Agrofert, valued at $4.3bn (£3.3bn), will be transferred to a trust managed by an independent administrator, where it will remain until his death. Then, it will be inherited by his children.

This arrangement, he stated in a Facebook video, went "far beyond" the stipulations of Czech law.

Clarification Needed

The specific type of trust has yet to be clarified – a trust under Czech law, or one based abroad? The notion of a "fully independent trust" does not exist in Czech legislation, and an team of legal experts will be required to craft an arrangement that is legally sound.

Skepticism from Anti-Corruption Groups

Critics, including Transparency International, continue to doubt.

"Such a trust is not the answer," argued David Kotora, the head of Transparency International's Czech branch, in an interview.

"The divide is insufficient. He undoubtedly is acquainted with the managers. He knows Agrofert's holdings. From an position of power, even at a EU level, he could possibly act in matters that would impact the sector in which Agrofert operates," Kotora warned.

Broad Reach Extending Past Agrofert

But it's not only food – and it's not just Agrofert.

In the eastern suburbs of Prague, a medical facility towers over the O2 arena. While it is owned by a company called FutureLife a.s, that company is controlled by Hartenberg Holding, and Hartenberg Holding is, in turn, majority-owned by Babis.

Hartenberg also manages a chain of fertility centers, as well as a florist chain, Flamengo, and an underwear retailer, Astratex.

The footprint of Babis into multiple areas of Czech life is extensive. And as prime minister, for the second time, it is about to get more extensive.